Banks sold $3.5 billion of the retirement products in the third quarter, 17% more than in the second and the highest quarterly total since the record year of 1994, according to Kenneth Kehrer Associates of Princeton, N.J.

Overall, bank annuity sales grew just 4%, to $7.1 billion. Variable sales dipped 6%, to $3.6 billion, dragging down the total.

"Fixed annuities are just starting to enjoy a little renaissance," said Felice L. Larmer, chairman of FirstMerit Corp.'s insurance and securities arm. "If you're in the business long enough, you see all the cycles."

Market jitters and new product features continue to attract customers to fixed annuities, she said.

Mr. Kehrer said so-called bonus-rate annuities -- which offer higher first-year returns because brokers' commissions are reduced -- have been catching consumers' eyes. First-year rates ranged from 6% to 9% during the quarter, he said.

A 9% bonus rate was offered by First Union Corp. on a fixed annuity underwritten by American General Corp. of Houston. On the first day it was offered -- Sept. 9 -- the investment drew in tens of millions of dollars, Mr. Kehrer said. The promotion has been extended through November.

"It's an example of the success of these bonus rates," Mr. Kehrer said.

Six-month dollar cost averaging programs paid 9.6% on average in the third quarter, compared with 9.4% the quarter before. Dollar cost averaging programs guarantee interest on money sitting in an account before it is dribbled into an annuity over time.

For 12-month programs the average rate was 7.5%, compared with 7.9% in the second quarter.

These rates are typically set on the basis of marketing considerations, Mr. Kehrer said.

Hartford kept its stranglehold on the top spot in variable sales, with 84% more in premiums than second-place Nationwide. Hartford also remained the top overall seller through banks, with more than $1 billion in sales.

American General remained the top seller of fixed annuities, at $861 million. It also held on to second place overall, with $980 million in sales. American General's fixed sales strength helped the company gain ground on Hartford, reducing the gap between them from $184 million in the second quarter to $54 million in the third.

"We're hoping in the fourth (quarter) to get them," said Bruce R. Abrams, executive vice president and chief marketing officer of American General Annuity. He said bank promotions have fueled two consecutive record quarters for the company and the fourth quarter looks equally good.

Nationwide and Allstate continued to hold third and fourth positions overall. General Electric Life Cos. placed fifth.

FirstMerit's Ms. Larmer said the fourth quarter started out slowly, but she expects a surge of annuity purchases by yearend. Investors have been waiting to determine where to shift money, she said.

American General's Mr. Abrams said demographics could also give the products a boost in coming years. The aging population will be drawn to the appeal of conservative investments with tax deferral, he said.

"The baby boomer generation is beginning to move more and more toward retirement," he said. "There are a lot of conservative investors out there."

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